FMC Oversight of Rail Storage Fees Still in ‘Gray Area,’ Industry Official Says
Shippers are continuing to press the Federal Maritime Commission for clarity around which agency should regulate certain rail storage fees imposed by ocean carriers on through bills of lading, saying little progress has been made in recent months, despite urging from the National Shipping Advisory Committee.
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Rich Roche, senior vice president at Mohawk Global and a member of the NSAC, hopes the FMC will soon “take this matter more seriously and actually come up with some policy on this,” he said during a committee meeting this week.
It remains unclear whether the FMC or the Surface Transportation Board has oversight over such fees, an issue that Congress may need to address. More than 70 trade groups have asked lawmakers to amend shipping regulations to give the FMC jurisdiction over the charges, saying they should be billed through the contracting carrier and be subject to FMC demurrage and detention invoicing requirements (see 2305030079).
Carl Bentzel, who recently left the FMC (see 2412130068), said in 2023 as a commissioner that he believed the FMC already had jurisdiction over the rail charges, but it wasn’t sure how to approach enforcement (see 2309110033).
Two years later, Roche said shippers still don’t have clarity. “Right now, we're stuck in the gray area between the Surface Transportation Board’s lack of ability to have this authority based on statute, and the FMC’s lack of this authority based on whatever their internal definition is of it,” he said. “So this is one that we would like to continue to push as we go forward.”
He added that the FMC’s recently revised billing regulations for detention and demurrage say “you must have privity of contract to be able to bill somebody,” and railroads “certainly do not have privity of contract” with the vessel-operating and non-vessel-operating carriers that are being invoiced for the storage fees.
“So we think there's a big disconnect there,” Roche said. “We think this is something that the FMC should be studying, and we're going to continue to push that dialogue as we need to.”
An FMC spokesperson didn’t comment. In response to an NSAC recommendation on this topic, the commission in 2022 wrote to the committee that "any expansion of the FMC’s jurisdiction must be legislated by Congress." It also said "ocean cargo that is shipped under a through bill of lading to a final destination in the United States remains under Commission jurisdiction for any Shipping Act violations."
The NSAC is also seeking feedback from shippers on the commission’s July 2024 final rule on unreasonable carrier conduct, which aims to address ocean carriers that unfairly refuse vessel or cargo space to shippers (see 2407220019). NSAC Chair Mike Symonanis, strategic network director with agricultural goods company Louis Dreyfus, said the FMC has gotten “limited to zero feedback” about how the rule is working.
“This is not to look for a problem, but if a problem is existing, it needs to be raised to start to be able to aggregate: Where do these things fall within the rule?” he said. “And is the rule in position to help the agency address them or not?”
Symonanis said the NSAC is also continuing to ask the FMC to create an advisory committee for ocean carriers. The group floated the idea a couple of years ago, but he said it “didn't move anywhere.”